New Report Estimates The eSports Industry To Be Worth $600 Million, So Now’s The Time To Get Good At Video Games Again
This past Memorial Day Weekend, while many headed to the beach or the lake, a select group of elite gamers headed to Los Angeles for the League of Legends College Championship. After six weeks of tournament LoL gameplay, Maryville University ousted the University Of Toronto for the championship in an exciting 3-1 match streamed by thousands online.
There’s big money in eSports — especially with Riot Games’ League Of Legends and it’s only getting bigger. In 2016, the winner LoL team — South Korea’s SK Telecom T1 — walked away from the tournament with a $2,680,000 purse split between its seven members. Second place also received a nice payday: A cool $1,005,000, also split seven ways.
With big prize money and huge, digital viewership online, the boom of eSports is getting all sorts of attention from investors looking for the next big thing. After attending the biz-eSports Summit in Los Angeles — a conference about the monetization of the eSports industry — one investment firm, Pacific Crest Securities, walked away with an estimate on just how big competitive online gaming is going to be. In 2017 alone, it estimates the entire industry to be worth $600 million. It could be even bigger when Blizzard Entertainment — maker of Warcraft, Diablo, and StarCraft — launches Overwatch League later this year:
Industry growth continues to be dynamic, but eSports is still early. Nearly 200 million people watch eSports regularly, which is likely to fuel at least about 50% year-over-year growth in the eSports market to about $600 million in 2017, according to NewZoo. The significant increase in interest and investment capital, combined with the launch of the Overwatch League, could accelerate that growth rate in 2018. Although eSports is still a frontier market, we believe its high growth, large audience and attractive demographics warrant investor attention.
The $600m valuation is up from a Goldman Sach’s estimate last year at $500m, noting 22% growth in the space, according to a Business Insider report:
Financial institutions are starting to take notice. Goldman Sachs valued eSports at $500 million in 2016 and expects the market will grow at 22% annually compounded over the next three years into a more than $1 billion opportunity.
And industry statistics are already backing this valuation and demonstrating the potential for massive earnings. To illustrate the market value, market growth, and potential earnings for eSports, consider Swedish media company Modern Times Group’s $87 million acquisition of Turtle Entertainment, the holding company for ESL. YouTube has made its biggest eSports investment to date by signing a multiyear broadcasting deal with Faceit to stream the latter’s Esports Championship Series. And the NBA will launch its own eSports league in 2018.
So what’s the next big boom in eSports? While competitive Call Of Duty and Battlefield are well established in the space, personally, I’m betting the farm on sports games with big purses and/or some sort of nostalgic throwback appeal to millennials: I.E. — EA Sports UFC, NBA 2K, WWE 2K. Also: RocketLeague, which just threw it’s first World Cup in L.A. a few weeks ago.
And when Nintendo inevitably throws its hat in the eSports ring for big bucks, expect that $600 million valuation to ballon into the billions. I can’t imagine how many people would compete online in Mario Kart, Goldeneye 007, and Super Smash Bros tournaments.
That’s how you make e-sports truly next-level.